Essays on Inequality and Macroeconomic Stability

This dissertation consists of three chapters. . . Chapter 1: Aggregate Wealth and Its Distribution as Determinants of Financial Crises: Panel Evidence This essay investigates the relationship between wealth inequality and financial crises across a panel of nine advanced economies over the past 100 years. While substantiation of a role for income inequality is ambiguous in the literature, evidence is presented suggesting a unique capacity for the accumulation of assets to increase the likelihood of a future financial crisis episode. Testing long-run panel data with a reduced form, two-way fixed effects model, estimates suggest that increasing wealth inequality, in an economy with high levels of aggregate wealth as measured by the wealth-income ratio, has a significantly positive and increasing marginal effect on the likelihood of future financial crises, particularly stock market crashes. Predicted probabilities from country-specific fixed effect logit models closely track the incidence of financial crises in the United States and United Kingdom over the last century. It is argued that these results reveal an important role for the distribution of accumulated assets in the macro-financial stability of rich countries. The distribution of stocks may capture structural vulnerabilities that the distribution of flows cannot expose, and hence more unequal countries in wealth face greater financial instability. An economic network hypothesis, elaborated in Chapter 2, is proposed for interpreting these results. Chapter 2: Network Defect: Wealth Inequality, Network Topology, and Financial Crisis If two, otherwise identical, economies were distinguished only by their distributions of wealth, are they equally stable in response to a random shock? This essay proposes a theoretical financial network model to understand the relationship between wealth inequality and financial crises. In a financial network, financial assets link individual asset and liability holders to form a web of economic connections. The total connectivity of an individual is de- scribed by their degree, and the overall distribution of connections in the network is imposed through a degree distribution—equivalent to the wealth distribution as incoming connections represent assets and outgoing connections liabilities. A network’s topology varies with the level of wealth inequality and total wealth and together, simulations show, they determine network contagion in the event of a random negative income shock to some individual. Random network simulations, whereby each financial connection is randomly placed, reveal that increasing wealth inequality makes a wealthy network less stable—as measured by the share of individuals failing financially or the decline in financial asset values. These results introduce the idea for a unique topological role for accumulated assets and their distribution in macro-financial stability. Chapter 3: Instability, Credit, and Inequality in the Twentieth Century The final essay studies the long-run relationship between financial instability, wealth inequality and aggregate wealth, and household debt. Specifically, it examines whether wealth inequality and aggregate wealth are contributing forces to the level of financial instability in the United States over the 20th century, or whether debt is a more crucial lever. A more traditional role for income inequality is also investigated and compared, in which its long-run increases may add to household debt and, from there, to a financial crisis. Applying a vector autoregression model, which assumes the endogeneity of the variables, and studying any cointegrating relations provides statistical validity to these relationships through rigorous specification and hypothesis testing. Results show that wealth inequality, acting in concert with the large accumulation of aggregate financial wealth, contributes significantly and positively to financial instability. A second long-run relationship is found between household debt and wealth inequality, whereby increases in financial instability are the main adjusting force back to stationary levels. Less robust evidence is found strongly linking household debt to financial instability, though income inequality does significantly contribute to debt long-term. Together, these results emphasize the important role for the distribution of accumulated wealth in the stability of the US economy

Associations Between C-Reactive Protein, Insulin Sensitivity, and Resting Metabolic Rate in Adults: A Mediator Analysis

Objective: Long-term positive energy balance promotes the development of obesity, a main risk factor for type 2 diabetes mellitus (T2DM). While an association between increased resting metabolic rate (RMR) and insulin sensitivity (IS) was shown previously, the underlying mechanisms remain unclear. Aim of the mediator analysis was to investigate the role of inflammation within the association between RMR and IS.Methods: Anthropometric, clinical, and lifestyle data were collected according to standard operating procedures. RMR was measured using indirect calorimetry. Homeostasis model assessment for insulin resistance (HOMA-IR) was used as an IS parameter and C-reactive protein (CRP) was measured to represent the inflammatory status. Statistical analyses were performed using SPSS.Results: The analysis included 782 adults (517 females) with a mean age of 32.4 ± 12.0 years and a mean body mass index (BMI) of 24.6 ± 5.2 kg/m2. Regression analysis indicated a significant evidence for associations between RMR and HOMA-IR (ß = 39.3 ± 7.3 kcal/d; p ≤ 0.001) and CRP and HOMA-IR (ß = 0.5 ± 0.1; p ≤ 0.001) after adjustment for fat-free mass, sex, age, and study site. Results of the mediator analysis did not support the hypothesis that CRP is a mediator for the association between RMR and HOMA-IR. These results did not change after participant stratification according to sex or BMI.Conclusion: A significant evidence for an association between RMR and IS was shown in a large cohort. However, the inflammatory status, determined via CRP levels, was not a mediator within this association

Inequality, Foreign Investment, and Imperialism

We present an empirical restatement of the classical economic theory of imperialism and the origins of World War I. Using recent data, we show 1) inequality was at historical highs in all the advanced belligerent countries at the turn of the century, 2) rich wealth holders invested more of their assets abroad, 3) risk-adjusted foreign returns were higher than risk-adjusted domestic returns, 4) establishing direct political control decreased the riskiness of foreign assets, 5) increased inequality was associated with higher share of foreign assets in GDP, and 6) increased share of foreign assets was correlated with higher levels of military mobilization. Together, these facts suggest that the classic theory of imperialism may have some empirical support

Inequality, Foreign Investment, and Imperialism

We present an empirical restatement of the classical economic theory of imperialism and the origins of World War I. Using recent data, we show 1) inequality was at historical highs in all the advanced belligerent countries at the turn of the century, 2) rich wealth holders invested more of their assets abroad, 3) risk-adjusted foreign returns were higher than risk-adjusted domestic returns, 4) establishing direct political control decreased the riskiness of foreign assets, 5) increased inequality was associated with higher share of foreign assets in GDP, and 6) increased share of foreign assets was correlated with higher levels of military mobilization. Together, these facts suggest that the classic theory of imperialism may have some empirical support

Effect of caloric restriction on gut permeability, inflammation markers, and fecal microbiota in obese women

Recent findings suggest an association between obesity, loss of gut barrier function and changes in microbiota profiles. Our primary objective was to examine the effect of caloric restriction and subsequent weight reduction on gut permeability in obese women. The impact on inflammatory markers and fecal microbiota was also investigated. The 4-week very-low calorie diet (VLCD, 800 kcal/day) induced a mean weight loss of 6.9 ± 1.9 kg accompanied by a reduction in HOMA-IR (Homeostasis model assessment-insulin resistance), fasting plasma glucose and insulin, plasma leptin, and leptin gene expression in subcutaneous adipose tissue. Plasma high-molecular weight adiponectin (HMW adiponectin) was significantly increased after VLCD. Plasma levels of high- sensitivity C-reactive protein (hsCRP) and lipopolysaccharide-binding protein (LBP) were significantly decreased after 28 days of VLCD. Using three different methods, gut paracellular permeability was decreased after VLCD. These changes in clinical parameters were not associated with major consistent changes in dominant bacterial communities in feces. In summary, a 4-week caloric restriction resulted in significant weight loss, improved gut barrier integrity and reduced systemic inflammation in obese women

Orthorexic tendencies moderate the relationship between semi-vegetarianism and depressive symptoms

PURPOSE Vegetarianism and semi-vegetarianism (i.e., overly vegetarian diet with rare consumption of meat) have been repeatedly linked with depression. As the nature of this association is unclear, we explored whether orthorexic (i.e., pathologically healthful eating) tendencies and ecological/ethical motives to follow a vegetarian diet may moderate the relationship between (semi-)vegetarian diets and depressive symptoms. METHODS Five-hundred eleven adults (63.4% females; 71.2% omnivores, 19.2% semi-vegetarians, 9.6% vegetarians) completed the Patient Health Questionnaire (PHQ-9) questionnaire-measuring depressive symptoms-and the Düsseldorf Orthorexia Scale (DOS)-measuring orthorexic tendencies. Based on respective questions, participants were categorized as omnivores, semi-vegetarians, and vegetarians (including vegans) and were asked to indicate whether they chose their diet based on ecological/ethical motives. Moderation analyses were carried out with PROCESS. RESULTS Adjusted for age, sex, and body mass index, there was a statistically significant interaction effect between diet (omnivore vs. semi-vegetarianism vs. vegetarianism) and DOS scores when predicting PHQ depression scores. At low or medium DOS scores, diets did not differ in PHQ depression scores (all > 0.05). At high DOS scores, however, semi-vegetarians had higher PHQ depression scores than both omnivores (p = 0.002) and vegetarians (p < 0.001). The interaction between diet and ecological/ethical eating motives when predicting PHQ depression scores was not statistically significant (p = 0.41). CONCLUSION Semi-vegetarians with strong orthorexic tendencies show more depressive symptoms than omnivores and vegetarians. The complex nature of the relationship between vegetarianism and depression requires further investigation. LEVEL OF EVIDENCE III, case-control analytic studies

Dynamic patterns of postprandial metabolic responses to three dietary challenges

Food intake triggers extensive changes in the blood metabolome. The kinetics of these changes depend on meal composition and on intrinsic, health-related characteristics of each individual, making the assessment of changes in the postprandial metabolome an opportunity to assess someone's metabolic status. To enable the usage of dietary challenges as diagnostic tools, profound knowledge about changes that occur in the postprandial period in healthy individuals is needed. In this study, we characterize the time-resolved changes in plasma levels of 634 metabolites in response to an oral glucose tolerance test (OGTT), an oral lipid tolerance test (OLTT), and a mixed meal (SLD) in healthy young males (n = 15). Metabolite levels for samples taken at different time points (20 per individual) during the challenges were available from targeted (132 metabolites) and non-targeted (502 metabolites) metabolomics. Almost half of the profiled metabolites (n = 308) showed a significant change in at least one challenge, thereof 111 metabolites responded exclusively to one particular challenge. Examples include azelate, which is linked to ω-oxidation and increased only in OLTT, and a fibrinogen cleavage peptide that has been linked to a higher risk of cardiovascular events in diabetes patients and increased only in OGTT, making its postprandial dynamics a potential target for risk management. A pool of 89 metabolites changed their plasma levels during all three challenges and represents the core postprandial response to food intake regardless of macronutrient composition. We used fuzzy c-means clustering to group these metabolites into eight clusters based on commonalities of their dynamic response patterns, with each cluster following one of four primary response patterns: (i) “decrease-increase” (valley-like) with fatty acids and acylcarnitines indicating the suppression of lipolysis, (ii) “increase-decrease” (mountain-like) including a cluster of conjugated bile acids and the glucose/insulin cluster, (iii) “steady decrease” with metabolites reflecting a carryover from meals prior to the study, and (iv) “mixed” decreasing after the glucose challenge and increasing otherwise. Despite the small number of subjects, the diversity of the challenges and the wealth of metabolomic data make this study an important step toward the characterization of postprandial responses and the identification of markers of metabolic processes regulated by food intake

Voluntary industry initiatives to promote healthy diets: a case study on a major European food retailer

OBJECTIVE To analyse the scope and content of the nutrition pledge announced by Lidl. DESIGN We applied the approach recommended by the private-sector module of the INFORMAS (International Network for Food and Obesity Research, Monitoring and Action Support) food environment monitoring framework and qualitative content analysis to Lidl's nutrition pledge. SETTING Global. SUBJECTS The nutrition pledge of Lidl, Europe's largest food retailer. RESULTS Lidl pledges to reduce the average sales-weighted content of added sugar and added salt in its own-brand products by 20 % until 2025, using 2015 as a baseline, starting in Germany. Moreover, it vows to reduce the saturated and trans-fatty acid contents of its own-brand products, without specifying targets or timelines. To achieve these targets, it pledges to apply a number of approaches, including reformulation, promotion of healthier products, reduction of package and portion sizes, and provision of nutrition information and education. Strengths of Lidl's pledge are its extensive scope, the quantification of some targets, and its partially evidence-based approach to the selection of targets and interventions. Key limitations include the vagueness of many targets, a lack of transparency and the absence of independent monitoring and evaluation. CONCLUSIONS Lidl's pledge, while commendable for its scope, does not meet current best practice guidelines. Given their current limitations, industry initiatives of this kind are likely to fall short of what is needed to improve population-level nutrition

Need for weight management in Switzerland: findings from National Blood Pressure Week 2009

<p>Abstract</p> <p>Background</p> <p>The Swiss Health Survey (SHS) provides the only source of data for monitoring overweight and obesity in the general population in Switzerland. However, this survey reports body mass index (BMI) based on self-reported height and weight, and is therefore subject to measurement errors. Moreover, it is not possible to differentiate between overall and abdominal overweight. In this study, we aimed to gain a better understanding of the need for weight management in the general population of Switzerland by exploring and comparing prevalence rates of BMI and waist circumference (WC) based on physical measurements by trained observers, based on data from the 2009 National Blood Pressure Week (NBPW).</p> <p>Methods</p> <p>Sample selection was based on a one-stage cluster design. A total of 385 pharmacies representing 3,600 subjects were randomly selected from pharmacies participating in NBPW. BMI measures based on physical weight and height (NBPW) were compared with self-reported BMI measures from the SHS. BMI and WC measurements from NBPW were then used to produce population estimates of overweight and obesity.</p> <p>Results</p> <p>BMI-based overall prevalence of overweight and obesity was 43.6%, which was 4.7% higher than the value based on the respective SHS data. Overweight and obesity were more common in men (54.3%) than in women (33.5%). However, the overall prevalence of increased WC in the general population was estimated to be 64.4%, with more women (68.4%) than men (60.1%) exhibiting a WC above the threshold. The prevalence of subjects requiring weight management in the Swiss population remained high, even after adjusting WC for false positive and negative cases.</p> <p>Conclusions</p> <p>Firstly, it may be more appropriate for health promotion programs to address the wider group identified by WC, which includes subjects who need to reduce their weight, or gain no further weight. Secondly, the gender differences are reversed depending on the use of WC or BMI to identify subjects suitable for health promotion programs; more women than men are identified by WC, and more men than women using BMI. These differences should be accounted for in gender-specific health promotion programs.</p